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Why the Aecon sale is a good deal for Canada

Brian Tobin and Michael Wilson

Contributed to The Globe and Mail

Published April 23, 2018Updated April 23, 2018

Brian Tobin is chairman of the Aecon board of directors, and vice-chair of BMO Capital Markets, one of the financial advisers to Aecon. Michael Wilson is chairman of Barclays Capital Canada, financial adviser to CCCC International Holding Ltd. (CCCI).

The government is currently considering whether the proposed sale of Aecon to Hong Kong-based CCCC International Holding Ltd. (CCCI) is in our country’s best interest. As two former federal industry ministers with a combined 39 years of public service, we can attest to the careful consideration the government is – and should – be giving this transaction.

While we were both intimately involved in the development of this transaction, we support it not only because it is sound financially, but also because we both see significant net benefits to Canada from the deal. Put another way, if either of us thought this was bad for Canada, we would not be on board. Why do we say this?

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If the transaction is approved, Aecon will continue to be headquartered in Canada, delivering the same high-quality work on which it has built its reputation. That’s good for the cities and towns that are rebuilding their infrastructure, and for the Canadian-based employees who will build these projects. That’s probably why Aecon’s people, including all its major unions, support the sale.

In fact, the transaction will deliver long-term benefits to Aecon’s stakeholders for years to come, by providing Aecon with access to capital and additional capabilities that will enable the company to take on more and larger projects, create jobs and assume more risk. This is exactly what our country needs as it builds new and improves existing infrastructure.

Should we be concerned about security issues? Of course – our national security must always be our primary consideration. But Aecon is a construction company, not a technology company. It holds no patents or intellectual property other than construction methods. It pulls cable, pours concrete, installs pipes, paves roads, bores tunnels and moves earth. The company’s construction work requires large “boots on the ground” work forces, but this just means that much of the money spent on a project remains in Canada, as payments to local workers, subcontractors and suppliers. Post-transaction Aecon will, like all companies based in Canada, continue to be subject to Canadian laws, labour standards and regulations that will continue to protect the interests of Canadian stakeholders.

Some of the deal’s most vocal critics have been Aecon’s competitors, or those speaking on their behalf. We understand their commercial concern, driven by self-interest rather than concern for benefits to Canadians, but they have often misrepresented the work Aecon does and the impact the transaction will have. This transaction would create stronger competition in the market, which is beneficial to customers, including taxpayers who pay for infrastructure projects. Despite the claims of competitors, CCCI will not provide Aecon with an unfair financial advantage or access to subsidized capital. It has never done this with other international companies it owns, and why would it? That would effectively mean a Chinese company is subsidizing the building of infrastructure abroad. No, the purchase will instead empower Aecon to succeed against its international competitors that are already operating in Canada. This in turn should lead to more jobs in communities across the country for Canadians – jobs that might otherwise go to companies with almost no physical presence in Canada.

The best reference for how Aecon would operate under its new ownership is Australia’s John Holland Group. Three years ago, CCCI acquired John Holland and since then, that company has grown domestically and expanded internationally. More Australians work for John Holland today than before the transaction was completed and there have been no issues with compliance or adherence to local or national laws under CCCI’s ownership.

We have both been involved with government policies to help Canada prosper. Trade plays an essential role in creating this prosperity. While trade with our neighbours to the south is critical – we both support a strong North American free-trade agreement – so too is increased trade and economic activity with the Asia-Pacific region, including the world’s second-largest economy, China. That country will soon have the largest middle class in the world, presenting huge opportunities for Canadian firms in agriculture, manufacturing, technology and finance. This range of exports includes everything from Open Text’s software to Bombardier jets and CANDU reactors.

To us, Aecon’s partnership with CCCI is an example of the kind of positive results that can be achieved when the Canadian and Chinese economies work together. We see tremendous reciprocal opportunities for both countries in the future, so long as we can ensure that we focus on merit, results, economic interests and net benefits, rather than fear, nationalism and outdated views.

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